Living Rent Free After a Foreclosure

In a sign of the times, more and more Americans are living in their homes post-foreclosure. An article in RSI media details the growing phenomenon and attributes the situation to the volume of foreclosures that have washed over the banks and the fact that they were not prepared to process them.

But the reality is that this situation has its advantages. The families that stay in the home post-foreclosure tend to keep the utilities on and maintain the property. They keep the A/C running which dehumidifies the house inhibiting mold growth and they winterize the pipes preventing costly leaks. In addition an occupied home is less likely to be vandalized (broken windows, copper theft) than a vacant home.

The backlog is one factor contributing the situation, the second is the volume of foreclosed properties on the market already. ForeclosureRadar says it now takes an average of 229 days for a bank to foreclose on a home in California after sending a notice of default, up from 146 days in August 2008.  In addition releasing more cheap inventory into the market will only further diminish the value of the bank;s asset. It pays for the bank to have a family living in the home until a point when the market stabilizes and they can recoup their investment in a sale.

Although the family’s credit now has a foreclosure on it, living rent free has give some people the opportunity to use their mortgage money to pay off other debts, and in some cases even save a little bit of money so that when they move to an apartment or other living situation they have the ability to restart their lives with a small financial cushion.

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